E. The proceeds of any bonds or notes issued by the State or the bank sold for the purpose of deposit in the fund;

F. Funds from school construction audit recoveries; and

G. Other funds and gifts in kind or cash from any public or private source received for use for any of the purposes for which the fund has been established and that the bank and the Department of Education may solicit from any 3rd parties such as foundations or corporations, including the use of tax credits as available to support activities authorized for the fund.

3. Purposes. The fund may be used:

A. To make loans to school administrative units for school repair and, renovation and small construction projects.

(1) The following repair and renovation needs receive first priority status:

(a) Repair or replacement of a roof on a school building;

(b) Bringing a school building into compliance with the federal Americans with Disabilities Act, 42 United States Code, Section 12101 et seq.;

(c) Improving air quality in a school building;

(d) Removing asbestos from or abating asbestos in a school building;

(e) Removing underground oil storage tanks on the grounds of a school building; and

(f) Undertaking other health, safety and compliance repairs.; and

(g)__Structural upgrades.

(2) Repairs and improvements not related to health, safety and compliance repairs receive 2nd priority status. Those repairs and improvements are limited to a school building structure, energy conservation and efficiency of basic infrastructure such as windows and doors and to a school building water or septic system systems.

(3) Upgrade of learning spaces in school buildings and small-scale capital improvements small school construction projects up to 10,000 square feet receive 3rd priority status.

(4) The Commissioner of Education may approve other necessary repairs;

B. To make loans to a school administrative unit to finance expenditures incurred after June 1, 1998 for repairs or renovations authorized under paragraph A and certified under subsection 5;

C. To guarantee or insure, directly or indirectly, the payment of notes or bonds issued or to be issued by a school administrative unit for the purpose of financing any repair authorized under paragraph A and certified under subsection 5;

D. To guarantee or insure, directly or indirectly, funds established by a school administrative unit for the purpose of financing any repair authorized under paragraph A;

E. To deposit with a lending institution or with a trustee bank, available fund balances to offset loan balances for school administrative districts undertaking projects authorized by paragraph A and certified under subsection 5;

F. To invest available fund balances and credit the net interest income on those balances to the fund;

G. To invest as a source of revenue or security for the payment of principal and interest on general or special obligations of the bank if the proceeds of the sale of the obligations have been deposited in the fund, or if the proceeds of the sale of the obligations are used for the purposes authorized in paragraph A and certified under subsection 5, or as a source of revenue to subsidize the school administrative unit loan payment obligations;

H. To pay the costs of the bank and the Department of Education associated with the administration of the fund and projects financed by the fund, except that no more than the lesser of 2% of the aggregate of the highest fund balances in any fiscal year and 4% of the combined value of any capitalization grants provided by the United States for deposit in the fund may be used for these purposes. The Commissioner of Education is authorized to receive revenue from the fund administered by the bank. Funds provided to

the Department of Education from the fund must be deposited in a nonlapsing dedicated account to be used to carry out the purposes of this section; and

I. To pay the reasonable costs of services provided to school administrative units by the Department of Administrative Services, Bureau of General Services, for oversight of school construction and renovation projects. Notwithstanding Title 5, section 1742, subsection 7, .4% of the total amount initially allocated to the fund must be transferred to the Bureau of General Services upon the effective date of this section.

4. Priorities. Periodically, and at least annually, the Department of Education shall prepare and certify to the bank a project priority list of those school administrative units whose projects are eligible for loans under this section. In establishing the priority list, the department shall grant special consideration to projects that include urgent health and safety needs. The department shall submit with the list the factors considered when determining the priorities.

5. Eligibility terms. The bank and the Department of Education shall develop by rule the terms of repayment of loans. A loan made pursuant to this section may not carry an interest rate higher than 0%. A loan may be made only if a project is certified by the Department of Education as eligible for financing under this section and is on the priority list prepared under subsection 4. The repayment period may vary depending upon the financial condition of a school administrative unit as identified by the Department of Education.

6. Forgiveness of principal payments. The fund must provide direct grants by forgiving the principal payments of a loan for an eligible school administrative unit. The amount of the forgiveness of principal payments must be determined by the school administrative unit's state share percentage of debt service costs as determined in Title 20-A, section 15611, not to exceed:

A. Seventy percent and no less than 30% for health, safety and compliance;

B. Seventy percent and no less than 30% for repairs and improvements; and

C. Fifty percent and no less than 20% for learning space upgrades and small school construction projects up to 10,000 square feet. The cost of approved small school construction projects above 10,000 square feet must be at local expense.

7. Establishment of accounts. The bank may establish accounts and subaccounts within the fund as it determines desirable to effectuate the purposes of this section, including, but not limited to, accounts to segregate a portion or portions of the fund as security for bonds issued by the bank for deposit in the fund and to be invested for the benefit of specified projects receiving financial assistance from the fund.

8. Rules. The Department of Education and the bank shall adopt rules necessary to implement this section. Rules adopted by the Department of Education and the bank to implement this section are major substantive rules pursuant to Title 5, chapter 375, subchapter II-A.

Sec. 3. Appropriation. The following funds are appropriated from the General Fund to carry out the purposes of this Act.

2001-02

EDUCATION, DEPARTMENT OF

School Renovation

All Other $30,000,000

Provides for the appropriation of funds for small school construction for the purpose of providing further capital to a revolving school fund pursuant to the Maine Revised Statutes, Title 30-A, section 6006-F. Any balance remaining at the end of each fiscal year may not lapse but must be carried forward to be used for the same purpose.

SUMMARY

This bill renames and expands the scope of the School Revolving Renovation Fund to include small construction projects of 10,000 or fewer square feet to existing schools. The bill provides an additional $30,000,000 to the fund for fiscal year 2001-02.